Economics 101

The global economy has been in turmoil for most people’s recent memory. No, it’s not just those of us in the United States that are feeling the pinch (but indeed, we are).

First, we suffered through the pandemic (enough has already been written about that), and when we raise our heads from that to see the light at the end of the tunnel, it ends up being an oncoming train in the form of Vladimir Putin invading Ukraine. That was about sixteen long months ago, and as troops slog it out in the trenches World War I style, there is no end in sight.

Economists tell us that despite a slight recovery in the second quarter, economic growth is likely stalling again. Looking overseas, we note that around the turn of the year, the 20 nations that use the euro have fallen into recession. Food prices are up across the board in Europe. This trickles down to the most basic of staples. Let’s look at white bread in Britain. Food doesn’t get much more basic than that. Last April, the cost of a loaf of white bread was up 28% over the previous year (1.39 pounds or approximately $1.72). Incidentally, that’s about what I pay now for a loaf of the ultra-cheap stuff at my local Walmart. Food and drink prices in the Kingdom have risen at the highest rate in over four decades.

How Does Russia Fit Into This?

I’m glad you asked. Russia used to be a superpower. Now their economy has dropped out of the top ten. Still, they supply a lot of energy to the world. This is despite the best efforts of Western sanctions against them. The tiny Middle Eastern nation of Qatar is concerned about the situation. Check that, they are “greatly concerned”.

When their foreign minister got word of Prigozhin’s rebellion yesterday, he responded with the following:

“The escalation of the situation in Russia and Ukraine will have negative repercussions on international security and peace, as well as on food and energy supplies,”

If Russian energy is not as freely available as it is now, countries like India and China will have to compete with the West for supplies. If the recent strife causes exports of fertilizer and grain to be further restricted prices go up for everyone who relies on Mother Russia as a breadbasket.